Second Circuit Finds that U.S. Government Cannot Discriminate Against Legal Same-Sex Marriages in Applying the Estate Tax

The U.S. Court of Appeals struck down the Defense of Marriage Act in the case of Windsor v. United States.  Specifically, the Court found that section 3 of the Act, which defines marriage as the legal union between one man and one woman, violated the Equal Protection Clause of the Constitution.

The case involved a same-sex couple who had legally married in Canada, and lived in New York.  One spouse died, leaving the other to inherit property.  The surviving spouse claim the spousal deduction for federal estate tax purposes, which was disallowed under the Defense of Marriage Act.  As a result, the estate tax bill amounted to over $300,000.

Under the Court's decision, the Federal Government would be required to recognize legal same-sex marriages when applying the federal estate tax.  In some respects, the Court's decision could be far-reaching, as legal same-sex marriages would have to be treated equally to heterosexual marriages for a variety of federal laws and programs, such as Social Security benefits, family leave and employee benefits.  On the other hand, the Second Circuit has jurisdiction only over Connecticut, New York and Vermont.  The only other federal court to find the Defense of Marriage Act to be unconstitutional is the First Circuit.  For the rest of the country, the Defense of Marriage Act remains the law of the land.  Nonetheless, the Second Circuit's decision makes it more likely that the U.S. Supreme Court will hear a case involving the Defense of Marriage Act.

I go into more detail in this article.

A New York Times article on the decision can be found here.

The text of the decision can be found here.

By:  William J. Kovatch, Jr.
(703) 837-8832
info@kovatchelderlaw.com

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Lost Will Can Cause Evidentiary Problems

In Virginia, when the executor is ready to open an estate, he or she makes an appointment with the probate division of the circuit court, and, among other things, brings the will. The probate division will require an original signed copy. But what if the will is lost? What do you do then?

The probate division will not accept a photocopy of the will. To admit a photocopy of the will, the executor will have to file an action in the circuit court requesting an order that the photocopy be admitted to probate.

But, proving that the court should issue the order is not always an easy task. The reason is that a person who writes a will has the right to revoke it. One way he or she can revoke it is by destroying the will. So, when you do not have the original will, you have to satisfy the court that the testator did not revoke it by destroying it.

Virginia law creates two presumptions. The first is that when the will was in the possession of the testator, if the will cannot be found, the will is presumed to have been revoked. The second is that when the will was not in the testator's possession and cannot be found, the will is presumed lost and not revoked. Either presumption can be overcome, but only with clear and convincing evidence.

The best practice is not to rely on presumptions. For example, assume the testator gave the original copy of the will to his or her lawyer for safe-keeping. After the testator's death, the lawyer cannot find the will. The executor should present testimony from the lawyer, not only that he or she cannot find the will, but also on the surrounding circumstances. Why was it lost? Did the law firm move? Did the lawyer have any communication with the testator after signing the will?

The executor should try to present other evidence as well. What kind of person was the testator? Did he or she talk with anyone about the will? Was there any family discord that would show that the testator had reason to revoke the will? Is there any reason to suspect undue influence?

The executor should be prepare to make this motion before going to the probate division. Without an order, the probate division will not admit the photocopy of will to probate. A qualified estate administration lawyer can help.

Preparing for Probate

It is traumatic enough when a loved one dies. Eventually, however, someone faces the task of wrapping up the affairs of the dearly departed. It can be daunting. There are bills to be paid, property to find, and, if anything is left, heirs to be paid.

How should someone begin? First, forget everything you've ever seen on TV. There is never a time when all of the heirs and people mentioned in the will are brought into a room for a formal reading of the will. Quite frankly, administering an estate will take time. It could be months before anyone really knows where the money is going.

First, you need to see if there is a will. Often, close relatives will know if there is a will and where it is kept. If you know who the decedent's attorney was, the attorney may know. Some people will file their will with the probate court while they are still alive. In some jurisdictions, if you are in possession of someone's will, you are legally obligated to come forward and file it. Failure to do so in the right period of time could result in fines.

You certainly should not wait for the will to be found to make funeral or memorial arrangements. With the time it takes to probate an estate, the will is not the place to put funeral or memorial instructions.

Next, you need to start identifying the decedent's assets. Did he own a house? Does he have a bank account? What other possessions did the decedent have? It may be necessary to safeguard the decedent's property until the administration is complete. If the decedent owns real estate, and no one else will live there, the utility companies should be notified.

Next, it is time to consider whether the decedent left a spouse and/or children. Immediate family will likely be entitled to an allowance from the estate until the administration is complete. This is also the time to consider whether the decedent had any pay on death accounts, such as life insurance or pension benefits. It is also the time to consider whether to file for any survivor's Social Security benefits. The final income tax return may need to be filed.

Whoever is responsible for winding up the decedent's affairs should also try to collect some initial information about the decedent's debts. Once initial information about a decedent's assets and debts have been collected, it may be time to file to open a probate estate. Many jurisdictions charge a probate fee based on the value of the property which will pass through probate. This is why you need at least a good estimate of the decedent's assets and liabilities before filing for probate. Notices will need to be given to the decedent's heirs at law, heirs mentioned in the will, and known creditors. A notice may need to be published in a newspaper.

In some states, if the assets are so few, it may not be necessary to probate the estate. Also, if the decedent's assets were mostly held in pay on death accounts, there may not be enough assets passing through a will or the law of intestacy to open an estate with the probate court.

Once an estate has been opened, the person in charge of winding up the affairs (depending on the circumstances this is the executor or the personal representative) will need to obtain a tax identification number for the estate, and open a bank account for the estate. The decedent's other accounts may need to be transferred to the new account.

The administrator will also have to be familiar with the probate court requirements. Usually, an inventory of the decedent's assets will need to be filed with the court and provided to the heirs and creditors. Later, the administrator will likely need to file accountings to show how the decedent's assets have been managed. The administrator should be sure to keep receipts.

There will usually be some kind of proceeding to determine the claims of any creditors. Once all creditors have been identified, their claims should be examined to determine their validity. Each jurisdiction will likely have in its law a listing of which claims have priority. The claims must be paid in that order. If anything is left over, the administrator may then be required to file an estate tax return and pay any estate or inheritance tax due. Then, the heirs can be paid.

Once all of these steps have been taken, then the administrator can file to close the estate. This an important step. In many states, opening the estate places the tax authorities on notice. The tax authorities will be looking for the estate to be closed to make sure any taxes that are due will be paid.

Probate need not be feared. While it involves a lot of steps, with proper advice and organization, it can go smoothly.